The Paris Bourse continued its positive trajectory this Friday, December 15, with a 0.56% rise in early trading, marking its fifth consecutive week of growth. Investors now turn their attention to December’s economic signals, while central banks have announced that they will extend interest rates to 2024.
In early trading on Friday, the Paris Bourse maintained its positive momentum, posting a gain of 0.56%. This marks the fifth consecutive week of gains, with the flagship CAC 40 index up 42.60 points to 7,618.45 at around 1pm.
On Thursday, it closed up 0.59%, closing in on its record set on April 21, 2023, but gave up most of its lead after ECB President Christine Lagarde’s press conference. Over the week as a whole, the CAC 40 was up around 1%, reflecting a positive trend on the financial markets.
Investors are keeping a close eye on the first indications for the month of December to assess the dynamism of economic activity. In France, the PMI Flash index indicates that the contraction in activity “strengthened” this month. This situation could influence central bankers’ decisions, prompting them to ease monetary policy to mitigate the risks of a deeper economic crisis.
In addition, the definitive publication of inflation in France reveals a rise to 3.5% year-on-year in November, according to Insee.
On the bond market, interest rates on French government bonds, which had been at an eight-month low, rose slightly: the 10-year yield was around 2.65%, compared with 2.64% at the close on Thursday.
Central banks react
Central banks were the focus of investor attention this week. On Wednesday, the US Federal Reserve (Fed) declared an extension of its interest rate moratorium. By keeping rates unchanged in line with expectations, the Fed hinted at the possibility of three rate cuts next year, a prospect that excited the markets.
But after this “wave of euphoria”, “neither the European Central Bank nor the Central Bank of England showed the same accommodative posture in their own decisions” on Thursday, summarized Deutsche Bank analysts. This “led the markets to back off somewhat on the chances of a sharp rate cut next year” on Thursday, they point out.
The ECB tempered this enthusiasm by stating that, in its view, “the time for discussions on rate cuts has not yet come”. President Christine Lagarde even announced her intention to reduce the size of its balance sheet from mid-2024, six months earlier than planned, a move unlikely to stimulate economic activity.
A wait-and-see attitude in the United States
In the US, expected economic data includes the release of the New York Fed manufacturing index today at 2:30pm, as well as the October industrial production and capacity utilization rate scheduled for 3:15pm.
In addition, the U.S. December Composite Purchasing Managers’ Index will be released at 3:45pm.
In New York, the main indices closed higher on Thursday, with the Dow Jones setting its second consecutive closing record. At around 1 p.m. on Friday, it was still up 0.43% at 37,248.35 points.
As for exchange rates, at around 12 noon, the euro was down 0.25% at $1.0968.
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